Do I Need Comprehensive or Collision Auto Coverage?

Selecting comprehensive and collision auto coverage is kind of like choosing ice cream.

OK, maybe it isn’t as fun, but hear me out. 

When getting soft-serve ice cream, there’s chocolate and there’s vanilla.

Do you want chocolate? Maybe vanilla? You could go for both and get a twist. Or you could choose to follow your diet and not have any ice cream at all. 

Comprehensive and collision are both optional coverages. You can choose to get one, both, or neither. 

Almost every state (including Massachusetts) requires car insurance. 

Generally, these requirements are for minimal coverage, including liability coverage that will pay for medical bills or damage to the car of the other driver and uninsured motorist, which protects the policy holder from a hit-and-run scenario.

In addition to these simple coverages, auto insurance policies offer optional coverages, specifically collision and comprehensive. 

Both of these physical damage coverages will increase the cost of your auto insurance policies, so do you really need them? Can you do without one? Or both?

When considering collision and comprehensive car insurance coverages, it may be difficult to know what these optional coverages offer and if they’re worth the higher premiums. We’ll look at these coverages offer and if they’re worth including on your policy.

Let’s begin with talking about what they cover, then get into the reasons why you may or may not want to pay for these coverages.

What is collision insurance?

Collision insurance covers damages to your vehicle from a collision (whether you are at fault or not.) These collisions can be with any object like a tree, pole, guard rail, pothole, or with another vehicle. 

If you get into an accident, collision coverage will pay to repair damages to your car up to the actual cash value of the car. If repair costs are higher than the value of the vehicle, the car will be considered “totaled” and the insurance company will pay you the value of your vehicle.

If the other driver is “at fault,” your insurance company will seek reimbursement from the other driver’s insurance company, and your insurance premium will not change. If you are considered at fault, your premium will very likely increase.

Collision coverage will also pay for vehicle damage from a hit-and-run or from an uninsured driver.

How much does collision insurance cost?

The cost of collision insurance depends on a number of factors, including garaging location, year, make, model, and age of the vehicle, the vehicle’s rating symbols, loss history, as well as the age and driving history of the drivers.

Because of this, the cost of comprehensive insurance is extremely difficult to estimate, but can be anywhere from $150 to $1,000 annually. 

Check with your insurance agent for a more accurate estimate based on your vehicle.

Beware of “limited collision”

Many insurance companies offer “limited collision,” which, as the name implies, does not offer full coverage and could result in a large bill if there is an accident.

Under limited collision, your insurance company will only pay for damages if you are 50% or less at fault, and the other vehicle is identified.

That means you will not be covered if you are at fault, or if your vehicle is damaged in a hit and run. 

While this insurance can be appealing because it is cheaper than full collision, it is usually not worth the risk.

What does comprehensive insurance cover?

Comprehensive insurance covers damage from your car resulting from incidents other than a collision. These incidents include:

• Vandalism
• Theft
• Wind 
• Flood
• Fallen objects (such as tree limbs)
• Hail 
• Pest infestation
• Collision with animals

Comprehensive also covers glass losses, and in MA glass is covered with no deductible (unless some unscrupulous insurance agent includes a glass deductible on a policy). 

How much does comprehensive insurance cost?

As is the case with collision, the cost of comprehensive depends on a number of factors, such as garaging location, year, make, model, and age of the vehicle, the vehicle’s rating symbols, loss history, as well as the age and driving history of the drivers.

However, comprehensive insurance tends to be much cheaper than collision insurance, usually ranging from $30 - $200 annually. 

Be sure to check with your insurance agent for a more accurate estimate based on your vehicle.

Should I buy collision and/or comprehensive insurance?

Having both collision and comprehensive coverage ensures you are prepared for nearly any type of incident that can damage your car. If you want the peace of mind of knowing you’re covered, you may want to carry both coverages.

Also, if you finance or lease your car, the bank usually requires that you have both types of coverages for the term of your loan.

If you can’t afford to pay for damages out-of-pocket if your car were to be damaged, you should certainly have both collision and comprehensive coverages. 

If you have a poor driving record with a history of accidents, it might be wise to keep at least collision coverage. If your chances of getting in an accident are higher, collision coverage might be worth the cost.

The same applies for parking outside. If you park your car outside or on the side of the road, it is more likely to be damaged by weather, fallen objects, thieves or vandalism, so you may want to consider at least keeping comprehensive.

Because the cost of comprehensive insurance is low, it might be wise to keep it, even on older vehicles, for the glass coverage alone. Windshield cracks are common, and if you’re carrying the coverage, you won’t have to pay for a new windshield.

If the increased cost of a policy with collision and comprehensive coverage is motivating you to drop or exclude the coverages, know that there are other options to save on your auto insurance, such as discounts, practicing safe driving, and making other adjustments to your policy.

Should I drop collision and/or comprehensive insurance?

While you will need collision and comprehensive insurance if you finance or lease your car, once your car is paid-in-full, choosing to purchase or exclude the optional coverages is up to you. 

If your vehicle is older and the value is low enough that you could afford to repair or replace it if it were damaged or destroyed, you may want to remove collision insurance.

For example, if your car is only worth $2,000 and you’re paying $500 annually for collision and comprehensive coverage, you may want to remove the optional coverage because: 

1) you are paying a high amount for coverage you might not need to use and 

2) you might have the money on hand to replace the vehicle if you needed to.

Some people use the “10% rule” to determine if they should have collision or comprehensive coverage. The rule says if the combined cost of the comprehensive and collision coverages exceeds 10% of the vehicle’s value, you should consider dropping them. 

Let’s go back to the example of the $2,000 car above. Ten percent of $2,000 is $200, so according to the 10% rule, the car owner should drop collision and comprehensive if they cost over $200. 

Of course, if you do drop these coverages, you will need to have the money to cover the repair or replacement of your vehicle if you were to get in an accident. The 10% rule may not make sense if you have limited funding, or if your vehicle still has a high value.

Choose the protection right for you:

We know choosing whether or not to have collision and/or comprehensive coverage can be difficult. Whether it be minor dents and scratches or a total loss, you want to be prepared for any situation and make the wisest possible decision when it comes to your insurance coverage.

Deciding whether to keep or drop collision and comprehensive coverage depends on an analysis about the value of your car and your financial situation. At Berry Insurance, we’ve helped countless clients navigate which coverages to include and how much coverage they really need. If you're interested in getting a better idea of what car insurance coverage you need on your policy, read this article: How Much Car Insurance Do I Need?

If you want to learn more about how comprehensive and collision can cover the most common auto claims, check out our article on the top 8 auto insurance claims in Massachusetts.